Montréal-based Novisto, which sells environmental, social, and governance (ESG) data-management software, has closed $27 million CAD ($20 million USD) in Series B funding to scale its platform.
The equity round was led by Montréal’s Inovia Capital, with support from fellow new investors Toronto-based Portage and Scor Ventures, the corporate venture capital arm of French reinsurance firm Scor. Novisto’s Series B financing also saw follow-on participation from White Star Capital and Montréal-based venture builder Diagram Ventures.
“It’s a critical time for sustainability initiatives to be taken seriously.”
A Novisto spokesperson told BetaKit that the company plans to invest its Series B funding in product development and market expansion, as it seeks to scale its artificial intelligence and data science efforts and expand across the globe.
ESG is a framework used to measure an organization’s business practices and performance from a social and sustainability perspective. ESG-focused investors consider a company’s climate-change initiatives, diversity, equity and inclusion (DEI), and corporate transparency.
Shareholders have been pressuring companies to improve transparency and bolster their ESG practices and policies for some time now. Amid the economic downturn, many investors have continued to prioritize ESG issues—even as some execs have backed away from ESG goals as they prepare for the possibility of a recession, and an anti-ESG movement has gathered steam south of the border.
Despite the overall growth of ESG-focused investment, Novisto claims that most sustainability reports released by companies today “lack standardization” and fail to provide actionable information. Novisto argues that companies “need a structured and organized approach to accurately define and address complex ESG issues, opportunities, and challenges.”
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Novisto aims to help companies do just that. The startup’s platform helps major global firms manage their ESG data and comply with increasingly stringent sustainability disclosure requirements. Founded in 2019 by CEO Charles Assaf, chief information officer Marian Borca, and chief partnership officer Edouard Clement, Novisto enables organizations to track and evaluate their ESG performance.
Novisto declined to disclose what valuation its Series B financing gives the company. The company told BetaKit that the round, which involved an undisclosed amount of secondary capital, brings its total funding to around $40 million CAD. This Series B capital comes about two years after the startup secured $9.6 million in Series A financing led by White Star Capital with participation from Diagram Ventures, which helped launch Novisto.
Amid growing demand for its ESG data-management software, Novisto claims to have tripled its revenue, customer base, and employee headcount year-over-year. The firm has grown to over 130 employees across North America and Europe, and approximately 70 customers, amassing a roster of big-name clients including Asana, Bell, Bombardier, Danone, Intact, Manulife, Meta, and Moderna.
To support its expansion plans, Novisto intends to use its Series B capital to grow its team to 200 with hires in tech, sales, and marketing roles.
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As The Globe and Mail has reported, activist investors are busier than ever these days. Per Bloomberg, in 2022, there were 26 new activist shareholder campaigns in Canada, and shareholder pressure regarding ESG reporting in particular remained elevated. According to a report from Laurel Hill Advisory Group, 88 percent of all shareholder proposals in Canada in 2022 concerned ESG matters, up from 62 percent in 2021.
Meanwhile, many regulators, including the Canadian Securities Administrators to the United States Securities and Exchange Commission and European Commission, have introduced or are developing mandatory ESG reporting requirements. Per PwC, many Canadian companies are “unprepared” for them. According to Novisto, these upcoming rules are “giving companies the push to put more organized ESG reporting in practice.”
As Inovia partner Magaly Charbonneau argued in a statement, “It’s a critical time for sustainability initiatives to be taken seriously, and Novisto’s platform helps companies produce quality, audit-ready ESG data that enables them to make quantifiable, meaningful change.” Charbonneau is joining Novisto’s board as part of the round.
UPDATE (05/25/23): This story was updated to note responses from Novisto.
Feature image courtesy Novisto.